When shoppers start watching every dollar, bargain retailers usually get a closer look. This one has seen its shares slide anyway, creating a gap between what the business offers and what investors are willing to pay.

Read on to see what the insiders are seeing.

IT Services

EPAM Systems Inc. (NYSE: EPAM) is facing fresh activist pressure after Engine Capital urged the company to increase share repurchases or dramatically consider a sale. One proposal calls for a $750 million accelerated buyback, equal to more than 12% of EPAM’s roughly $6.1 billion market value.

The timing stands out because EPAM has fallen about 44% this year, yet management still guides for adjusted 2026 EPS of roughly $13.16 at the midpoint. At today’s price, the stock trades near 9 times guided adjusted earnings.

EPAM also ended June with about $789 million of cash and only $25 million of long-term debt. You are getting that balance-sheet strength alongside a business that improved adjusted operating margin to 16.4% in Q2 and increased adjusted EPS by 22%.

The Share Count Is Already Moving Lower

Management spent roughly $409 million on repurchases in the first half of 2026, reducing shares outstanding by around 5% from year-end levels.

Engine Capital now wants EPAM to go much further, and a $750 million accelerated repurchase at depressed prices could give your ownership stake considerably more earnings power without requiring revenue growth to accelerate suddenly.

AI Fears Explain Part of the Discount

Revenue growth remains modest, North American execution has drawn criticism, and investors are still debating how generative AI will reshape demand for traditional software-development services.

Those risks warrant a lower multiple, but if you believe EPAM can protect margins and continue adapting its service mix, paying roughly nine times adjusted earnings leaves far less growth embedded in the valuation.

Utilities

PG&E Corporation (NYSE: PCG) fell roughly 19% after California lawmakers failed to deliver the broader wildfire-liability protections utility investors had expected. The selloff erased billions in market value even though PG&E has not withdrawn its 2026 core EPS guidance of $1.64 to $1.66.

Around $13.45, the stock now trades near 8.2 times guided core earnings. PG&E had also been targeting more than 9% annual core EPS growth from 2027 through 2030, supported by a large capital program and expanding regulated rate base.

You are paying a much lower multiple today, but the discount comes with a serious condition attached. California wildfire exposure has already pushed PG&E through bankruptcy once, so investors have good reason to demand compensation for the risk.

The Earnings Engine Is Still Intact

PG&E expects continued investment in transmission, grid upgrades, and infrastructure, partly tied to growing electricity demand from large customers and data centers. If those investments keep expanding rate base as planned, your return does not require the stock to regain its old valuation immediately, because earnings growth can still do part of the work.

Wildfire Risk Deserves a Discount

California’s legislative outcome weakens part of the long-term capital story and leaves more uncertainty around catastrophic liability.

That makes 8x earnings less obviously cheap than the number suggests, but if you think existing protections and future reforms can keep wildfire losses manageable, today’s 19% reset may have pushed the risk discount further than the operating outlook alone would justify.

Agricultural Equipment

Titan Machinery Inc. (NASDAQ: TITN) jumped after Baird upgraded the stock to Outperform and lifted its price target from $20 to $29. The call follows a major balance-sheet cleanup, with equipment inventory down nearly $600 million from its fiscal 2025 peak.

Even after today’s rally, Titan trades at a market value of around $480 million against roughly $558 million of shareholders’ equity. That leaves the stock near 0.9 times book value, an unusual discount if the agricultural equipment downturn is finally approaching its bottom.

The latest quarter still showed pressure, with revenue falling to $496 million and Titan posting a $9.2 million loss. Yet equipment margins improved 190 basis points, while lower inventory helped cut floorplan interest expense by about 30%.

The Balance Sheet Is Starting to Heal

Titan spent much of the downturn carrying too much equipment as farmer demand weakened, so clearing that inventory changes the economics before sales fully recover. Your upside depends partly on whether lower financing costs and better equipment margins can continue, because even a modest normalization in profitability would look different against today’s below-book valuation.

A Cycle Recovery Is Not Guaranteed

Farmers are still cautious, equipment demand remains weak, and Titan is currently losing money, so book value alone does not make the shares cheap. But you do not need fiscal 2024 earnings of nearly $5 per share to return immediately for the setup to improve, only evidence that inventory, margins, and cash flow have passed their worst point.

Grocery Outlet (NASDAQ: GO)

You probably know the feeling of walking into a grocery store and wondering how the bill got that high. Grocery Outlet has built its business around giving shoppers a reason to hunt for bargains, buying closeout and overstock inventory opportunistically and passing those savings along. The stock trades well below intrinsic value estimates, and insiders have bought roughly $8.2 million of shares over the past year. 

You rarely get that kind of buying while a stock is falling, which gives you a useful signal about how management views the valuation. Keep an eye on comparable-store sales, because if more shoppers keep trading down, you could be looking at a business whose model is suddenly in the right place at the right time.

Parsons Corporation (NYSE: PSN)

You do not need to win a $14 billion government contract to benefit from one. Parsons just secured a position on a contract vehicle covering missile evaluation and testing for the Defense Intelligence Enterprise, giving it the chance to compete for task orders throughout the program. That gives you something more useful than a headline award: a longer runway for future government work. 

Management is also putting its own money behind the company, buying roughly $3.1 million of shares over the past year without reported selling, including a 20,000-share purchase in the last three months. With the stock trading well below intrinsic value estimates, you are getting exposure to high-priority defense work without having to chase the sector’s most expensive names.

Somnigroup International (NYSE: SGI)

If you are looking for the housing recovery trade, you do not necessarily need to buy a homebuilder. Somnigroup owns Tempur Sealy and Mattress Firm, giving you exposure to a category where demand tends to improve when people move, renovate, or simply decide that the old mattress has had enough. 

While housing activity has been sluggish, the company is already working on roughly $100 million of expected annual net cost synergies from the Mattress Firm integration, with sales synergies running ahead of schedule. 

That gives you an operational improvement story today and a housing recovery as additional upside later. The stock remains below conservative intrinsic-value estimates, while its high-quality score gives you a little more comfort than you normally get with a beaten-down cyclical.

That's our coverage for today; thanks for reading! Reply to this email with feedback or any stocks you want me to check out.

Best Regards,
—Noah Zelvis
Undervalued Edge